Asia's Real Challenge: China’s "Potemkin" Rise

If one looks only at the explosive growth of China’s Gross Domestic Product (GDP) since the country began to embrace capitalism and global integration more than thirty years ago, it is impossible to deny that China’s rise is both real and breathtaking. In 1978, China’s GDP was US$214 billion in purchasing power parity (PPP). By 2012, it was, unadjusted for inflation, roughly 40 times bigger (US$8.3 trillion in PPP). Of course, there are other measurements of China’s economic rise, such as its share of global steel production (it is now the largest producer, with an output of more than 700 million tons in 2012), energy consumption (it has surpassed the United States to become the world’s largest consumer of energy), and foreign trade (its total imports and exports in 2012 were $2.84 trillion, second only to the U.S.’s $3.85 trillion).

To be sure, given the Chinese officials’ fondness for fudging numbers, many people both inside and outside China (including Mr. Li Keqiang, the new prime minister) are justifiably skeptical about the credibility of China’s GDP data. In some cases, such skepticism can become so extreme that it leads many to conclude that China’s rise is more likely a statistical fiction, cooked up by the Chinese ruling elites to aggrandize their power and glory.

Vigilant obsession with the accuracy of the Chinese growth data may expose, from time to time, minor acts of fraud. Chinese provincial officials habitually report growth numbers that, when added up, significantly exceeded the total calculated by the Chinese National Statistics Bureau. But such fastidiousness comes at a great cost: we may overlook a problem far bigger than fake GDP data. The real scandal in China’s rise is not its exaggerated speed, but the shockingly low quality of its growth. Low-quality growth has undermined China’s social fabric and individual welfare. It also makes China look far stronger on paper than in reality.

To understand why this is the case, we must ask a different question. Instead of harping on Chinese GDP numbers, we should instead scrutinize the quality of China’s rise. Quibbling whether the Chinese economy has been growing at double-digit or not is uninteresting since one undeniable fact is that whatever measurements of speed we use, the Chinese economy has grown many times larger.

The real issue today is not the size of the Chinese economy and the rate of its growth, but its inner strength and quality.

The most evident sign that China has sacrificed quality for speed in its economic growth is its catastrophic environmental degradation. This year’s air pollution crisis is just one reminder that Beijing’s single-minded pursuit of GDP growth has been an unmitigated disaster. It is not an exaggeration to argue that China’s long-term survival as a civilized nation is now at risk because of water pollution (two thirds of Chinese rivers are severely polluted) and contamination of soil by heavy metals (studies show at least 10 percent of the arable land was tainted with heavy metal in the late 1990s; a government-sponsored national survey of soil conditions conducted a few years ago yielded such alarming data that they are now classified as state secret).